SPY Trends and Influencers August 8, 2020

• Posted by Greg Harmon
• on August 8th, 2020

Last week’s review of the macro market indicators saw with July in the books, equity markets showed resilience with a rebound from consolidation. Elsewhere looked for Gold ($GLD) to continue higher while Crude Oil ($USL) consolidated in a tight range. The US Dollar Index ($DXY) continued to move to the downside while US Treasuries ($TLT) continued their uptrend. The Shanghai Composite ($ASHR) was building tightening consolidation while Emerging Markets ($EEM) consolidate in their uptrend.

The Volatility Index ($VXX) looked to continue to drift lower making the path easier for equity markets to the upside. Their charts also looked strong, especially on the longer timeframe. On the shorter timeframe both the $SPY and $IWM continued moving up in consolidation. The $QQQ looked the strongest moving back toward all-time highs.

The week played out with Gold pushing to the upside over $2000 to new all-time highs before profit taking Friday while Crude Oil continued to move in a tight range, drifting higher. The US Dollar finally found support in its pullback and consolidated while Treasuries bounced around in a range near the April highs. The Shanghai Composite consolidated its gains over the 20 day SMA while Emerging Markets tested higher but fell back, holding over the 20 day SMA.

Volatility continued to drift lower, ending at the February gap up low. This took pressure off equities and they responded by moving higher. The IWM drove higher all week. The SPY also had a steady move higher until a pause Friday. The QQQ gapped up Monday and held before driving to new all-time highs and then seeing some profit taking Friday. What does this mean for the coming week? Let’s look at some charts.

SPY Daily, $SPY

The SPY was back at the July highs and the February gap when the week started. It pushed up into the gap Monday and continued to move higher all week. Friday saw it stall after it closed the gap Thursday, but held at more than 5 month highs. The daily chart shows the price riding the upper of the Bollinger Bands® as they open higher. The RSI is on the edge of a move into overbought territory with the MACD crossed up and moving higher.

The weekly chart shows the gap fill and strong move higher out of recent consolidation. The RSI is rising but nowhere near overbought with the MACD rising and short of the February high. There is resistance above at 339, the all-time high. Support lower comes at 332 and 327 then 324 and 320 before 318.50. Uptrend.

SPY Weekly, $SPY

With the first week of August in the books, the dog days of summer are nowhere to be found. Instead equities are finding renewed strength as they move higher. Elsewhere look for Gold to continue higher while Crude Oil consolidates in a slow drift up. The US Dollar Index looks to consolidate the move lower while US Treasuries pause in their uptrend. The Shanghai Composite looks to continue the short term move higher while Emerging Markets continue to consolidate.

The Volatility Index looks to continue to drift lower making the path easier for equity markets to the upside. Their charts look strong, especially on the longer timeframe. On the shorter timeframe both the IWM and SPY also look strong and ready for more upside. The QQQ, with profit taking, may see some rotation out into the other 2 ETF’s. Use this information as you prepare for the coming week and trad’em well.

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